A changing world for lawyers

The world companies are operating in is changing, and forward-looking lawyers are changing with it.

10 February 2016

Laws are rapidly evolving in the field of business and human rights. By way of example:

In the UK, the Companies Act was revised to require listed companies to provide human rights information in their reporting to shareholders. A recent piece of legislation, the Modern Slavery Act, requires companies which carry on all or part of their business in the UK, with a turnover of £36 million or over, to prepare public statements describing the steps taken to ensure that slavery and human trafficking are not taking place in their supply chains and business

In France, Parliament is in the process of debating a law which would require companies to put in place due diligence aimed at identifying and preventing adverse human rights impacts in their supply chains

In Switzerland, after the Swiss Lower Chamber accepted and then rejected a motion for a bill requiring Swiss companies to conduct human rights due diligence on their operations overseas, a coalition of Swiss civil society organizations launched a popular initiative designed to compel the passing of this law. If this coalition gathers 100,000 signatures by November 2016, the proposed measure will be put to a binding referendum

At the European Union level, a directive to be transposed by Member States by October 2016 will require human rights information, including relating to human rights due diligence, to be provided by certain large EU companies

In the United States, Congress passed a law requiring the disclosure of due diligence on the source and chain of custody of conflict minerals sourced from the Democratic Republic of Congo and surrounding countries, the U.S. Administration authorized new investment in Myanmar on the condition that companies investing in the country disclose steps taken to avoid infringing on human rights and a Californian law requires certain companies to report on their actions to eradicate slavery and human trafficking in their supply chains

Plaintiffs are finding creative ways to bring companies to court for their connections to adverse human rights impacts overseas:

Laws not originally envisioned as encompassing human rights are being relied upon. The tort of conversion was the basis for the UK lawsuit by Cambodian villagers against Tate & Lyle for purchasing sugar cane grown on their land from which they had been illegally and forcibly evicted. Laws in the state of California that prohibit false advertising and unfair competition have been used to bring lawsuits against Nestlé, Mars and Costco for failing to disclose slave labor in their fishing supply chains in Thailand

Lawsuits against parent companies for the actions of their subsidiaries overseas are increasingly deemed admissible. In the UK, there is no longer an objection in principle to a parent company having a legal duty of care to its subsidiaries’ employees. In Canada, law suits brought by Guatemalan villagers against Canadian parent company Hudbay Minerals for human rights violations at the mine operated by Hudbay’s subsidiary have been accepted by the Canadian judicial system and are proceeding to trial. In the Netherlands, an appeals court recently overturned a lower Dutch court decision and ruled that it had jurisdiction over Shell and its subsidiary for oil spills in Nigeria

In addition, plaintiffs are increasingly resorting to non-judicial mechanisms:

National Contact Points are set up by governments adhering to the OECD Guidelines for Multinational Enterprises to handle enquiries and contribute to the resolution of issues that arise from the alleged non-observance of the guidelines. A large number of instances have been brought related to human rights since 2011 and have led, for instance, to SOCO International withdrawing its operations from Virunga National Park in the Democratic Republic of Congo

National Human Rights Commissions are increasingly asked to play a role in the field of business and human rights, especially when they have the capacity to receive complaints. Upon receiving a petition from civil society, the Commission on Human Rights of the Philippines has agreed to investigate 50 companies’ role in climate change and resultant harms to communities’ human rights

Other dispute resolution and complaints mechanisms are now also being used. For instance, the Compliance Advisor Ombudsman (CAO) – the recourse mechanism for projects supported by the International Finance Corporation (IFC) – launched a public investigation into labor conditions on tea plantations in India owned by Tata Tea Limited and financed by the IFC following a complaint from workers. The North American Free-Trade Agreement (NAFTA) has recently received a complaint from labour and civil society organizations related to labour conditions at Mexican retailer Chedraui Commercial Group

As the legal environment for companies is changing, the legal community is also starting to change:

Bar associations are starting to integrate human rights into their work and develop guidance for their members on what business and human rights mean for law firms and lawyers. The International Bar Association recently approved Guidance for Bar Associations which urges bar associations to develop an overall strategy for integrating the UN Guiding Principles into the practice of law and provides information to heighten awareness of the implications of the Guiding Principles for lawyers. The UK Law Society of England and Wales has launched a programme to address business and human rights in the legal profession, including preparing a Law Society practice note on this area

Leading law firms are starting to design corporate responsibility strategies that fit the firm’s structure and risk profile and reflect the risks as well as opportunities for lawyers in this area. They are thinking about how corporate responsibility translates in concrete terms to their lawyers in various practice groups such as contracts, disputes, mergers and acquisitions, employment, real estate and tax. They are also starting to think about the implications of the corporate responsibility to respect for the management of their own business, with their own supply chains, employment practices and other business activities

In-house lawyers are starting to reflect on their role in anticipating and reducing the human rights risks for their companies. They are increasingly acting as wise counselors and trusted advisors, in addition to providing technical legal expertise to their companies

To quote John Ruggie: “We’ve come a long way in just a few years. Where previously corporate counsel expressed deep skepticism about the implications of the UN Guiding Principles, corporate in-house legal leaders are now challenging their outside counsel to proactively advise them on human rights risks.”